2023 Social Security beneficiaries experienced an 8.7% COLA (Cost of Living Adjustment), marking the most significant adjustment since 1981. The United States Social Security Administration (SSA) bases COLAs on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Therefore, when inflation begins to subside, it reduces COLA for Social Security recipients.
Current Economic Climate
At present, inflation is at its lowest point in two years, having fallen to a 12-month rate of 3.0% in June, a decrease from 4.0% in May and 4.9% in April. David Payne, a staff economist from the Kiplinger Letter, predicts a 3% Social Security COLA for 2024, following this year’s 8.7%.
Predictions for 2024
The Senior Citizens League, one of the country’s largest nonpartisan seniors groups, initially predicted a 2.7% Social Security COLA for 2024. However, despite the continued slowdown in inflation, the group’s 2024 Social Security COLA estimate has risen to 3% this month. They have calculated that a 3% COLA would increase the average monthly benefit of $1,787 by slightly more than $53.60.
Impact on Different Beneficiary Groups
Based on data from The Social Security Administration, here are the average monthly Social Security benefits for each group of beneficiaries in June 2023, along with estimated averages based on the 3% COLA prediction for 2024:
- Retired workers: Average monthly benefit of $1,837.29 could increase to $1,892.41.
- Spouses of retired workers: Average monthly benefit of $893.01 could rise to $919.80.
- Children of retired workers: Average monthly benefit of $859.79 could grow to $885.58.
- Survivor benefits: Average monthly benefit of $1,451.85 could increase to $1,495.41.
- Non-disabled widow(er)s: Average monthly benefit of $1,713.36 could rise to $1,764.76.
- Disabled widow(er)s: Average monthly benefit of $894.78 could increase to $921.62.
- Disabled workers: Average monthly benefit of $1,486.42 could rise to $1,531.01.
- Spouses of disabled workers: Average monthly benefit of $407.63 could increase to $419.86.
However, these estimates are subject to change as there are three more months of data before the Social Security COLA is officially announced in October 2023.
Historical COLA Data
For reference, here is a list of every official Social Security COLA, in chronological order from 2023 to 2009:
- 2023: 8.7%
- 2022: 5.9%
- 2021: 1.3%
- 2020: 1.6%
- 2019: 2.8%
- 2018: 2.0%
- 2017: 0.3%
- 2016: 0%
- 2015: 1.7%
- 2014: 1.5%
- 2013: 1.7%
- 2012: 3.6%
- 2011: 0%
- 2010: 0%
- 2009: 5.8%
The Bottom Line
While Social Security plays a crucial role in many people’s retirement strategies, staying informed about potential changes and adjusting your financial planning is essential. The anticipated 3% COLA for 2024 is just one of many factors to consider in your retirement journey.